Just had 48 kills with a 120 in a 27 minute 2v2 XD
It is pretty strong most of the time. As far as not wanting capping units dead, just shift click them in a circle if they are in range of a 120.
I don't find that it consistently wipes squads. However I do find that it is very good at finishing wounded squads. If you spend 45 munitions - 1+ minute of munitions - you probably should have a good chance of killing a couple soldiers. Maybe some form of audio alert like the whistle needs to be added so you know that you should retreat/move things like wounded mg42's or paks that are the primary target for these single shots.
Edit: Not to mention Ostheer do have a mobile doctrinal mortar unit that can rain flames on capping units and constantly force the 120mm around.
Everyone seems to be forgetting that the Precision Strike is best used against enemy mortar teams as a counter-barrage ability to completely deny German forces of any indirect fire until Tier 4 Panzerwerfers (minus the doctrinal Mortar Halftrack). In fact, it performs this role much better than the actual (and very useless) Counter Barrage ability on veteran German mortar teams.